The New York Times notices one of the more offensive examples of crony capitalism, the use of tax-free industrial revenue bonds and their ilk to subsidize big projects by private businesses, such as the headquarters of Goldman Sachs. True to that paper's tradition, though, the problem is not so much that the government is picking winners or concentrating power in the largest and most politically connected businesses or trading favors, but -- you guessed it -- there is less tax revenue to hand around to other beneficiaries more in favor with the paper's editors:
At a time when Washington is rent by the politics of taxes and deficits, select companies are enjoying a tax break normally reserved for public works. This style of financing, called “qualified private activity bonds,” saves businesses money, because they can borrow at relatively low interest rates. But those savings come at the expense of American taxpayers, because the interest paid to bondholders is exempt from taxes.Just when you think the Grey Lady is on to something important, she reveals that it was nothing but coincidence.
What is more, the projects are often structured so companies can avoid paying state sales taxes on new equipment and, at times, avoid local property taxes. While some deals might encourage businesses to invest where they might otherwise not have invested, there are few guarantees that job creation or other economic benefits actually occur.